JSX prices jitter following rumor
JAKARTA (JP): Prices at the Jakarta Stock Exchange (JSX) tumbled briefly yesterday on a rumor about President Soeharto's health. In Singapore, where traders caught wind of the rumor, the rupiah's exchange rate fell, while its interest rates rose.
The JSX index fell to 584 points before it rebounded to close at 588.61, compared with an opening of 594.40.
In Singapore, the U.S. dollar ended at 2,338 rupiah from an opening quote of 2,326 after holding steady for more than 13 days. A European banker said offshore interest rates for the rupiah rose significantly, AFP reported.
In Jakarta, price recovery occurred when it became apparent that it was business as usual for the President, as he attended his scheduled meetings for the day.
Minister/State Secretary Moerdiono, when asked by journalists, reassured that Soeharto was in good health. "You saw for yourselves that the President is healthy," he said.
Soeharto opened a national meeting of an Islamic studies group and received a Japanese parliamentary delegation, and an American power company, accompanied by U.S. Ambassador Stapleton Roy, at the presidential palace complex yesterday.
"Many investors engaged in panic selling following the rumor. Because the most liquid stocks are big shares, some of those shares were corrected later in the afternoon," a senior analyst from a London-based securities company told the Post.
"I think it's normal that the market immediately reacts on any rumor about the President," the analyst said.
"Many foreign investors also contacted us to clarify the rumor, but they canceled on liquidating their portfolios after we told them that the Minister/State Secretary has stated that the President is in good health," he added.
A dealer with PT Penthasena Arthasentosa, A. Sumirat, said the market performed strongly in the morning session and the index managed to go higher.
"Technically, the market should have gone up today supported by positive news on inflation," Sumirat said, referring to the 0.07 percent deflation for June announced on Wednesday.
Sumirat believed foreign investors did most of the selling. "They are more sensitive to these kinds of rumors. Moreover, most of the weakening stocks today are big shares, which are mostly owned by foreigners," Sumirat added.
The impact of the rumor faded by late afternoon.
"We are still trying to confirm the report that Soeharto will fly to Germany for a medical checkup," Sumirat added.
Moerdiono refused to answer when asked to confirm reports of any impending presidential trip abroad. The President had been scheduled to pay a working visit to Kuala Lumpur next week. (alo/mds)